Perhaps the Malaysian taxpayers can now resort to giving 'surat aku janji' to the Income Tax Department in lieu of paying taxes in cash, as it seems that according the AOB and the SC, a letter of promise is as good as a cash payment as far as the Malaysian Government is concerned.
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| PM Najib was misleadingly caught up in the 'surat aku janji' mess |
The first part of the question asked how were the firm of PricewaterhouseCoopers and a director from its board, registered as auditors on the 1st of April 2010, by the Audit Oversight Board under Section 31s (1) of the Securities Commission Act, when most of the members of the Audit Oversight Board were themselves appointed after the 1st of April 2010?
In the reply prepared for PM Najib, it was stated that the AOB took a pro-active stance in registering the firm of PricewaterhouseCoopers and one of it's directors to facilitate the companies listed (sic) in hiring auditors, which is usually done in the second quarter as well as to help the companies eliminate unnecessary costs.
The AOB came into existence on the 1st of April 2010, and the closing date for applications for the senior personnel who will be in charge of conducting the necessary investigations and inspections was just one month prior to that. The board members themselves were only appointed on the 1st of April 2010. Yet the AOB would like us to believe that they had the people necessary to do all the inspections under Section 31P of the SCA, and get the registration for PwC and it's director ready for approval on the very first day the Oversight Board members met each other.
The reason given for the hasty registration is, not put too fine a point on it, a lie. This is because the initial explanation given by the AOB on the registration process, clearly stated that companies can go ahead with the audit firm they had picked in the AGM's prior to the 1st of April of 2010, and that the auditors can go ahead with their audits even though their registration under the AOB was pending.
And nowhere in Section 31 of the SCA is it stated that the function of the AOB is to help corporations save money, instead their function is to
(a) to promote and develop an effective and robust audit oversight framework in Malaysia;
(b) to promote confidence in the quality and reliability of audited financial statements in Malaysia; and
(c) to regulate auditors of public interest entities.
The AOB has definitely failed to promote confidence in the CG framework of the country by rubber-stamping the registration of PwC in such a manner and with such deplorable excuses on its very first day of operations.
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| Chin Kwai Fatt, the root cause for the AOB and 'surat aku janji' mess |
The second part of the question raised in Parliament was who approved and signed the letter of registration for the firm of PricewaterhouseCoopers and it's director? Was it the Chairman of the Securities Commission or the Director of the AOB? What mechanism was in place to accept and process the application when the Chairman of the Securities Commission only signed the amendment (sic) on the 8th of April 2010, and the Second Finance Minister signed it on the 13th of April 2010?
In the reply prepared for PM Najib, the AOB did not answer the question and does not state who exactly approved the registration. Perhaps it is a mystery even to those that prepared the text of the reply.
Furthermore by stating that "the AOB has utilised the surat aku janji (letter of promise) from the audit firms for the purpose of payment of fees, so that the companies listed will not have any problems in hiring auditors while waiting for the law to come into force," the AOB has made a mockery of the very foundation of the auditing profession.
Is there any auditor in the world who will find a place for something as silly as a 'surat aku janji' in the financial statement that he prepares for his clients? How can the AOB so blatantly state that it accepts a letter of promise in lieu of payment when it clearly states under Section 31 of the SCA that the fees must be paid together with the application for registration.
"31O. Application for registration and renewal of registration as auditor of public interest entity
(1) An application for registration or renewal of registration as an auditor of a public interest entity for the purposes of this Act shall be made to the Audit Oversight Board.
(2) The application under subsection (1)—
(a) shall be made in the form as may be determined by the Audit Oversight Board; and
(b) shall be accompanied with—
(i) the fees as may be prescribed by the Commission; and"
Perhaps the Malaysian taxpayers can now resort to giving 'surat aku janji' to the Income Tax Department in lieu of paying taxes in cash, as it seems that according the AOB and the SC, a letter of promise is as good as a cash payment as far as the Malaysian Government is concerned.
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